The big question in the room mid-2022:
Are we heading towards an economic meltdown?
Although the big institutions still say that the economy is on an upward trajectory and try giving a positive outlook, there are already other voices in the room that warn before an upcoming recession.
What are the current action plans?
Klarna takes a down-round
The company is the rising star of the Buy Now Pay Later movement. Klarna was founded in 2005 in Sweden and is Europe's most promising fintech.
Last year in June, the board nailed a funding round led by Softbank at a valuation of 45.6 billion dollars.
The company was set up for growth at any price, which resulted in growing revenues and, at the same time, growing losses.
Since such models burn through the cash position quickly, Klarna started raising funds to keep the model going.
According to Wall Street Journal:
The Sweden-based payments company is aiming to raise up to $1 billion from new and existing investors in a deal that could value it in the low $30-billion-range after the money is injected, the people said. That would represent a roughly 30% drop from the previous round.
In January, they started talking with investors demanding a valuation of over 50 billion dollars, which doesn't seem feasible given the current market conditions.
Since interest rates are rising, the war in Ukraine is ongoing, and supply chains are heavily disrupted, I wonder how long it will be possible for companies like Klarna to raise capital for cash-burning business models.
W.S.J. News Exclusive | SoftBank-Backed Fintech Giant Klarna Looks for New Funds at Lower Valuation
Tesla cuts back on Jobs.
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